January 29, 2015 – When we suggested to “stay tuned” in our note of November 21, 2014 “AWS-3 Auction Blasts Through the $1.50 per MHz-pop Threshold”, the auction had completed 23 rounds. We could not have predicted that would have been 7% of the rounds and only half the proceeds. And that we would have to stay tuned not just through Thanksgiving, but Hanukkah, Christmas, New Years’, Martin Luther King Day, and then some. But on January 29 at Round 341 the AWS-3 spectrum license auction finally came to its conclusion at $2.21 per MHz-pop, the highest average (paired and unpaired) price of all of the US spectrum auctions to date.
The US industry has now virtually tied the record for total proceeds in a spectrum license auction, having made the Government $45 billion richer – comparable to the German 3G auction held in 2001 – and equivalent to almost $140 for each American man, woman and child.
In the turmoil of the 4G era, the AWS-3 auction by itself adds over 80% to the revenues from FCC mobile spectrum auctions, by itself accounting for over 45% of the proceeds from all the auctions held over the last 20 years
This bodes well for broadcasters ahead of the 600 MHz incentive auction slated for early 2016.
The AWS-3 auction clearly points to massive pent-up demand for key spectrum resources in the first major US mobile license award since early 2008, when the 700 MHz auction raised what now appears to be a “paltry” $18 billion. Of course, at that time the iPhone was nascent, Android handsets were just around the corner, and the iPad did not exist.
Looking forward to upcoming spectrum auctions, the US AWS-3 prices may yield upward pressure on prices in auctions in Germany and the UK, two well-developed mobile markets planning to award significant spectrum assets in 2015.
Canada, also to be soon awarding AWS-3 spectrum, is however playing to a different drum having chosen to offer this valuable spectrum at rock bottom prices in a sealed bid auction in a major effort to solidify future prospects for new entrant mobile carriers across the country while likely depriving the Canadian treasury of a significant injection of funds.
As the US mobile industry turns its attention to the Broadcast Incentive Auction, AWS-3 has made it clear that the stakes have never been higher.
LYA is pleased to have supported a major bidder in its preparation for the US AWS-3 auction. We bring extensive auction experience and expertise, with both SMRA and CCA auction formats and their variations, along with the LYA Auction Platform used extensively by bidders for preparation in a number of auctions.